The CHAIRMAN. Congressman? Mr. FRELINGHUYSEN. I believe so. The CHAIRMAN. There is no Congressman named Mallory Stephens. Mr. FRELINGHUYSEN. I don't know. I said to the best of my recollection and belief. The CHAIRMAN. I can say there is no Congressman named Mallory Stephens, and there was none in the last 38 years I have been in Congress. Mr. WOLF. I believe, Mr. Chairman, he is a member of the New York State Legislature. I don't know whether he is a senator or assemblyman. Mr. MALETZ. Mr. Chairman, I believe The CHAIRMAN. Or he was a member-I don't think he is a member now. Mr. MALETZ. So the record may be clear-and I think this is a matter without dispute Mr. Stephens was a member of the New York State Assembly from 1925 through 1952, and from 1942 to 1952 he was chairman of the ways and means committee of the State assembly. And if there is any question, I would include in the record at this point an extract from Who's Who, together with a New York Times article bearing directly on the background of Mr. Stephens. The CHAIRMAN. They will be accepted for the record. Mr. MALET. I offer an article from the New York Times dated June 25, 1952, together with a statement prepared for the committee by the Library of Congress, taken from Who's Who. If the chairman would permit, I would just read the extract from Who's Who. The CHAIRMAN. You don't have to do that. That will be accepted for the record. (The documents referred to appear at pp. 1226 and 1227.) Mr. MALETZ. Mr. Frelinghuysen, is it not a fact that Mr. Stephens controls an insurance brokerage firm known as Knickerbocker Associates? Mr. FRELINGHUYSEN. Again, Mr. Maletz, to the best of my recollection and belief-and this is speaking of something that is 8 or 9 years ago Mr. MALETZ. Yes. Mr. FRELINGHUYSEN. I Would recall that he was affiliated with it. Whether he controlled it or not, I don't know. Mr. MALETZ. I see. He was affiliated with Knickerbocker Associates to the best of your present recollection and belief; is that correct? Mr. FRELINGHUYSEN. Yes, sir. Mr. MALETZ. And is it your present recollection that Knickerbocker Associates was located, about 8 or 9 years ago, at 70 Pine Street, New York City? Mr. FRELINGHUYSEN. I don't know. Mr. HOLTZMAN. Could you tell us how you first learned of the name of Mallory Stephens? Or the Knickerbocker Insurance Agency? Mr. FRELINGHUYSEN. Well, I had known-Mr. Holtzman, I have been in the insurance business since 1934, and I generally am familiar with most of the names of the brokerage firms and agencies, and I believe I heard of Knickerbocker just as common knowledge in the business. I don't recall where I heard of Mr. Stephens the first time. Mr. MALETZ. Mr. Frelinghuysen, in December of 1949, was your concern instructed, by the port authority, and specifically by Mr. Tobin, to work out an arrangement whereby Mr. Mallory Stephens insurance firm was to obtain the brokerage commissions on certain port authority insurance policies covering the Columbia Street piers? Mr. TOBIN. Excuse me, Mr. Maletz. That word was retained? The CHAIRMAN. Just a minute, please. We asked a question of the witness. Mr. MALETZ. Obtained. Would you like me to repeat the question? The CHAIRMAN. I want no interruptions. I want this to be gotten in an orderly fashion. Mr. MALETZ. Would you like me to repeat the question? Mr. FRELINGHUYSEN. No. There is no yes or no answer to the question, because it doesn't correctly state the circumstances. Mr. HOLTZMAN. Let me ask you this question. You have no present recollection of how you even heard of the name Mallory Stephens; is that correct? Mr. FRELINGHUYSEN. For the first time. I know-I recognize Mr. HOLTZMAN. When did you first learn of the name Mallory Stephens? The CHAIRMAN. No coaching, Mr. Wolf. Mr. WOLF. I am not coaching him, Mr. Chairman. Mr. FRELINGHUYSEN. I don't recall, Mr. Holtzman, whether I learned of him in connection with this transaction to which Mr. Maletz referred, or whether I had heard of him before that time. Mr. HOLTZMAN. Well, did you finally come to this Columbia transaction, and were you then made acquainted with the name of Mallory Stephens? Mr. FRELINGHUYSEN. Well, I was acquainted with it in connection with the Columbia transaction; yes. Mr. HOLTZMAN. In connection with that transaction, Mr. Maletz has asked whether you were told or instructed or directed by Mr. Tobin to share commissions with him or let him participate in the commissions in connection with the placement of this particular insurance. Is that correct? Mr. FRELINGHUYSEN. Not specifically; no, sir. Mr. HOLTZMAN. Well, what is the fact? Mr. FRELINGHUYSEN. We were instructed to place the business through his office, which in our terminology is quite a different thing than sharing commissions. We actually placed it with Knickerbocker. The CHAIRMAN. You were to do the work; were you not, sir? Mr. FRELINGHUYSEN. To my recollection, we did the engineering work on the Columbia Street pier, and reviewed the policies and checked them. Mr. HOLTZMAN. Who wrote the policies? Mr. FRELINGHUYSEN. Knickerbocker wrote them, to my recollection. Mr. HOLTZMAN. All right. Did you have the capacity, as an officer of the Frelinghuysen Co., to place this kind of insurance on your own without seeking the help of Knickerbocker or Mallory Stephens? Mr. FRELINGHUYSEN. Yes, sir. Mr. HOLTZMAN. In other words, you could have placed this on your own; is that correct? Mr. FRELINGHUYSEN. This is asking me something, sir, that— Mr. HOLTZMAN. Well, let me withdraw that and put it to you this way. Suppose no direction had been given to you in connection with the Knickerbocker Insurance Co. Would you have placed this out of the Frelinghuysen Co.? Mr. MALETZ. Did you have any discussions or meetings, Mr. Frelinghuysen Mr. FRELINGHUYSEN. Sir? Mr. MALETZ. I am sorry. Did you have any discussions or meetings in December 1949 with any officer of the port authority as to developing a procedure whereby Mr. Stephens' insurance brokerage firm, Knickerbocker Associates, was to obtain the commissions for the port authority's Columbia Street pier? Mr. FRELINGHUYSEN. Well, I am having great difficulty recalling this, Mr. Maletz. Mr. MALETZ. We will refresh your recollection in just a minute. But I wonder whether you now have any present recollection of this? Mr. FRELINGHUYSEN. Well, my present recollection would be that it was handled by another man in my office. Mr. MALETZ. I show you, Mr. Frelinghuysen, a series of documents which were supplied by your office, including, I believe, sir, one document in your handwriting, and ask you if you will examine them. Mr. FRELINGHUYSEN. I recall these documents, Mr. Maletz. Mr. MALETZ. I beg your pardon? Mr. FRELINGHUYSEN. I recall these documents now, Mr. Maletz. Does this refresh your recollection as to exactly what occurred as to this particular matter? I will read the documents in a few moments. But does this refresh your recollection as to the events that transpired as of December 1949? Mr. FRELINGHUYSEN. Yes, sir. And I think it confirms my testimony that this business was placed through Knickerbocker, rather than a sharing of commissions. Mr. HOLTZMAN. On that point, Mr. Frelinghuysen, that really is splitting hairs; is it not? The fact is Mr. MALETZ. May we have the documents back, sir? Mr. HOLTZMAN. The fact is that it was suggested to you that you place a policy through someone, but the sum total of it is that you actually participated in the commissions with that individual. Is that not so? Mr. FRELINGHUYSEN. No, sir. Mr. HOLTZMAN. When you place a policy with the "A" agency, the fact is that all you do is call them and suggest that they write a policy? Is that not so? Mr. FRELINGHUYSEN. Well, in this case, Mr. Holtzman Mr. HOLTZMAN. Is that a fair statement, Mr. Frelinghuysen? Mr. HOLTZMAN. All right. And is not the net result of this kind of thing a handout, so to speak, from you, who could use these commissions yourself, to someone else? You would have liked to earn these commissions yourself, would you not? Mr. WOLF. Mr. Holtzman Mr. HOLTZMAN. No, wait. Would you not have liked to earn the commissions on the Columbia River project on your own, on behalf of Frelinghuysen? The CHAIRMAN. Columbia Street pier. Mr. HOLTZMAN. Columbia Street pier. Mr. FRELINGHUYSEN. Well, naturally, as an insurance broker, I could hardly answer "No" to that question. Mr. HOLTZMAN. Right. But you were told, in essence, to place it through the Knickerbocker Co., is that not so? Mr. FRELINGHUYSEN. That is right. Mr. HOLTZMAN. And the sum total of that is that you were told to give a commission for the placement of insurance to the Knickerbocker Co., is that not so? Something you could have written on your own, something that you had the capacity to write on your own-is that not so? Mr. FRELINGHUYSEN. Yes. Mr. HOLTZMAN. All right. Mr. MALETZ. Mr. Chairman-Mr. Frelinghuysen, the first letter of a series which I gave you is presumably a draft and reads, as follows: Hon. MALLORY STEVENS, Knickerbocker Associates, 70 Pine Street, New York City DEAR MALLORY: Confirming our conversation of last week it is the intention of the Port of New York Authority that Knickerbocker Associates be made the broker (of record) for the following insurance on the Columbia Street pier: Fire, Lightning; Extended coverage; Collision and Elements”— which is scratched out and in pencil or pen inserted, "Pier and Wharf Endorsement"-"Rental Value" with the handwritten notation "Omit." Our brokers, J. S. Frelinghuysen Corp., will continue to service this policy in its entirety and will deliver to Knickerbocker Associates the policies for transmittal to the Port of New York Authority together with your invoice covering the premium. You, in turn upon receipt of payment from the Port of New York Authority can reimburse the J. S. Frelinghuysen Corp. less the normal— and that is scratched out to read standard brokerage commission payable on this insurance. It so happens that this policy is now on binder, and the policy has not as yet been issued. The date of the binder is-and it will be for a period of 5 years at a total 5-year premium of, we understand, $74,681.56. When the policy is ready for issuance J. S. Frelinghuysen Corp. will deliver to you for handling as outlined above. It is understood that future renewals of this policy— which word is scratched out to read schedule of insurance will be handled through Knickerbocker Associates in the same and "the" is scratched out a similar manner as outlined above the latter three words being scratched out. There are some figures at the bottom of the page. Is the handwriting on this document yours, Mr. Frelinghuysen? (The document referred to appears at p. 1228.) Mr. MALETZ. Mr. Frelinghuysen, is it not correct that this is a draft letter which either was prepared in your office, or submitted to your office, for review, for ultimate signature of Mr. Tobin? Mr. FRELINGHUYSEN. I believe so. Mr. HOLTZMAN. By whom was this prepared? Mr. MALETZ. Who prepared the draft-the first draft? Mr. FRELINGHUYSEN. I cannot be certain. It was either myself or one of my associates. Mr. MALETZ. Yourself or one of your associates? Mr. FRELINGHUYSEN. From the fact that my own handwriting is on there, making corrections, I woud assume it was done in our office. Mr. HOLTZMAN. Mr. Frelinghuysen, the words "broker of record" usually presupposes in the insurance business that it is a broker, or he is a broker who does nothing but lend his name to a policy. Is that not correct? Mr. FRELINGHUYSEN. No, sir. Mr. HOLTZMAN. You are sure about that? Mr. FRELINGHUYSEN. No, it is the broker who handles the business. Mr. HOLTZMAN. I will repeat the question. When you speak of a "broker of record" in the insurance business, does it not connote a broker who shares a commission, but usually does nothing else? Mr. FRELINGHUYSEN. No, sir. Mr. HOLTZMAN. All right. Mr. MALETZ. Mr. Frelinghuysen, do you recall a discussion of this on December 20, 1949? The document is captioned "P.A. Conf.," December 20, 1949, "Memorandum of conversation with Mr. Kushell on the Columbia Street Pier." After considerable discussion the letter to Mallory Stevens was redrafted to include only: Fire, Lightning, ECE— and that, I take it, is extended coverage? Mr. FRELINGHUYSEN. Extended coverage endorsement. Mr. MALETZ (continuing): including pier and wharf endorsement, on the Columbia Street pier. 5-year premiums total $85,190.56. An amount of $975,900, in policies dating May 1, 1949 is to be canceled as of December 15, and rewritten for a period of 5 years. These policies will be handled through Knickerbocker Associates as specified in Mr. Kushell's letter. Mr. Bennett is preparing the detailed figures and setting them up for cancellation. Do you recall this memorandum, sir? (The document referred to appears at p. 1229.) Mr. FRELINGHUYSEN. Yes, generally. J.S.F., Jr. Mr. MALETZ. And the Mr. Kushell referred to-was that Charles Kushell, the then comptroller of the Port of New York Authority, sir? |